[SPARTECH LOGO]
COMPANY CONTACTS:
George A. Abd Randy C. Martin
President and Executive Vice President and
Chief Executive Officer Chief Financial Officer
(314) 721-4242 (314) 721-4242
FOR IMMEDIATE RELEASE THURSDAY, JUNE 8, 2006
SPARTECH ANNOUNCES RECORD SECOND QUARTER 2006 RESULTS
----------
ST. LOUIS, JUNE 8, 2006 - Spartech Corporation (NYSE:SEH) announced today its
operating results for its second quarter ended April 29, 2006.
SECOND QUARTER 2006 HIGHLIGHTS:
- - NET SALES INCREASED BY 3% TO $389.3 MILLION FOR THE QUARTER. OPERATING
EARNINGS FOR THE QUARTER WERE $28.0 MILLION COMPARED TO $6.3 MILLION FOR
THE PRIOR YEAR QUARTER AND RESULTED IN NET EARNINGS OF $13.9 MILLION WHICH
WAS THE HIGHEST NET EARNINGS QUARTER IN COMPANY HISTORY. OPERATING EARNINGS
BEFORE STOCK OPTION EXPENSE AND SPECIAL ITEMS WERE $29.2 MILLION COMPARED
TO $24.3 MILLION FOR THE SECOND QUARTER OF 2005. NET EARNINGS EXCLUDING
THESE ITEMS WERE $14.7 MILLION.
- - NET EARNINGS WERE $0.42 PER DILUTED SHARE, AFTER STOCK OPTION EXPENSES AND
SPECIAL ITEMS, COMPARED TO $0.00 PER DILUTED SHARE IN THE SECOND QUARTER OF
2005. EARNINGS PER DILUTED SHARE BEFORE STOCK OPTION EXPENSES AND SPECIAL
ITEMS WERE $0.44 COMPARED TO $0.35 IN THE SECOND QUARTER OF 2005. EARNINGS
FOR THE FIRST HALF OF 2006 WERE $0.65 PER DILUTED SHARE EXCLUDING THESE
ITEMS COMPARED TO $0.43 FOR THE SAME PERIOD LAST YEAR.
- - CASH FLOWS PROVIDED BY OPERATIONS INCREASED TO $26.1 MILLION FOR THE SECOND
QUARTER OF 2006 COMPARED TO $22.0 MILLION FOR LAST YEAR'S SECOND QUARTER.
THIS ENABLED THE COMPANY TO PAY DOWN $25.2 MILLION OF DEBT, AND AT THE END
OF THE SECOND QUARTER THE COMPANY HAD NO DEBT OUTSTANDING ON ITS EXISTING
BANK CREDIT FACILITY.
SUBSEQUENT EVENTS AND OUTLOOK:
- - THE POSITIVE CASH FLOW FROM OPERATIONS OVER THE PAST FOUR QUARTERS HAS
PROVIDED THE OPPORTUNITY TO PAY DOWN MORE THAN $110 MILLION IN DEBT AND
RESULTED IN OUR LOWEST DEBT TO EQUITY RATIO IN THE LAST TEN YEARS. THE
COMPANY HAS UNDERTAKEN A SERIES OF CAPITAL STRUCTURE TRANSACTIONS
SUBSEQUENT TO THE END OF THE SECOND QUARTER THAT WILL REDEEM $150 MILLION
OF HIGH INTEREST RATE CONVERTIBLE PREFERRED SECURITIES WITH $50 MILLION OF
5.78% FIXED RATE DEBT AND $100 MILLION OF BORROWINGS FROM OUR BANK CREDIT
FACILITY OR CASH ON HAND. THE AVAILABILITY UNDER THIS FACILITY HAS BEEN
INCREASED FROM $200 TO $300 MILLION WHICH MAINTAINS OUR FLEXIBILITY TO
QUICKLY FINANCE ACQUISITION OPPORTUNITIES.
- - AS A RESULT OF SIGNIFICANT PROGRESS TO DATE IN OUR BUSINESS IMPROVEMENT AND
BALANCE SHEET MANAGEMENT EFFORTS, THE COMPANY IS INCREASING ITS EARNINGS
GUIDANCE FOR FISCAL 2006 BY $0.05 PER SHARE TO A RANGE OF $1.28 TO $1.38
EXCLUDING THE EFFECTS OF FAS 123(R) AND SPECIAL ITEMS. THIS RESULTS IN
GUIDANCE OF $1.22 TO $1.32 PER SHARE INCLUDING THE IMPACT OF STOCK OPTION
EXPENSING OF APPROXIMATELY $0.06 PER SHARE FOR THE FULL YEAR, BUT BEFORE
THE IMPACT OF SPECIAL ITEMS RELATED TO RESTRUCTURING AND DEBT REFINANCING
ACTIVITIES.
-MORE-
SPARTECH CORPORATION
SECOND QUARTER 2006 EARNINGS
ADD 1
OVERVIEW OF RESULTS
Net sales for the second quarter were $389.3 million compared to $377.7 million
in the second quarter of 2005, representing an increase of 3%. This total was
the result of a 4% increase in price/mix over 2005, with underlying volume in
our Custom Sheet & Rollstock segment down 2% while our Color & Specialty
Compounds segment volume was up 1% over the prior year's second quarter. The
price/mix increase reflects selling price changes from the management of raw
material and conversion cost fluctuations, and sales mix changes. The 2%
decrease in underlying sales volume in the Custom Sheet & Rollstock segment was
primarily related to a decline in the packaging market impacted by the loss of a
government subsidized dry milk program where the customer utilized our rollstock
for the production of pudding cups. The increase in sales volume in the Color &
Specialty Compounds segment related to strength in the Building & Construction
and Transportation markets net of the loss of toll-compound business to a
customer in the electronics market that has been decreasing over the last
several years.
Operating earnings reported for the second quarter of 2006 were $28.0 million
compared to $6.3 million in the prior year second quarter. Included in operating
earnings for the quarter were $0.6 million of costs related to the expensing of
stock options resulting from the adoption of FAS 123(R) which became effective
in our first quarter of 2006 and $0.5 million related to special items from
plant restructurings. Operating earnings excluding stock option expenses and
special items were $29.2 million for the second quarter of 2006 compared to
$24.3 million in the prior year quarter, up 1.4 cents per pound sold to 7.6
cents in the second quarter of 2006. This increase reflects a material margin
that was 1.9 cents higher than last year's second quarter related to better
management of resin price changes partially offset by higher conversion costs
and lower selling and administrative costs. Conversion costs increased .8 cent
per pound sold related to an increase in freight and utilities expense of $3.4
million, partially offset by $1.7 million of labor-related cost reductions from
our 2005 restructuring activities.
Reported net earnings totaled $13.9 million or $.42 per diluted share for the
second quarter of 2006 compared to an $80 thousand net loss with no diluted
earnings per share in the second quarter of 2005. Net earnings excluding stock
option expenses and special items were $14.7 million or $0.44 per diluted share
for the second quarter of 2006 compared to $11.3 million or $0.35 per diluted
share for the second quarter of 2005. To clarify our discussions of performance
compared to the prior year periods we have included certain non-GAAP measures
that exclude both stock option expenses and special items. Refer to the GAAP to
non-GAAP reconciliations at the end of this Release.
Commenting on the results, George A. Abd, President and CEO, stated, "We were
pleased with our progress in realizing benefits from our reorganization over the
past 12 months. While freight and utility costs had a negative impact to our
results, the consistent improvement in our labor costs as well as the focus on
better margin levels through new product sales enabled us to come in a bit ahead
of schedule on our plan."
Mr. Abd also stated, "In the past year we have made tremendous progress in many
areas in our effort to improve the Company's operations, cost structure and to
refocus on return on investment. We are ahead of schedule for some of our plans,
particularly those related to cash generation and margin improvement, but we are
diligently focused on the many opportunities that remain. I am very pleased that
our team's performance in cash management has put us in the position to
restructure our debt while maintaining a high level of available borrowing
capacity to pursue both acquisition and internal growth opportunities."
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SPARTECH CORPORATION
SECOND QUARTER 2006 EARNINGS
ADD 2
SEGMENT RESULTS
CUSTOM SHEET & ROLLSTOCK--Net sales in our Custom Sheet & Rollstock segment were
$240.9 million in the second quarter of fiscal 2006, an increase of 1% from the
$238.1 million produced in the same three month period of 2005. This sales
increase reflects a 4% increase in price/mix less an underlying sales volume
drop of 2% and a 1% decrease from the sale of our Canadian corrugated sheet
business. The volume decrease came primarily from a drop in packaging sales,
impacted by the loss of a government subsidized dry milk program where a
customer utilized our rollstock for the production of pudding cups, net of some
increases in volume at both our Mexico facility for the appliance market and
Donchery facility for the multi-layer gas tank project.
This segment's operating earnings for the second quarter of fiscal 2006 were
$20.5 million compared to $9.8 million in the second quarter of the prior year.
The segment's operating earnings included $.1 million of a gain on sale of
assets from a facility closed in the 2005 restructuring and $.2 million for the
expensing of stock options in the second quarter of 2006 and $9.5 million of
restructuring and exit costs and fixed asset charge in the second quarter of
2005. Excluding stock option expenses and special items, operating earnings of
$20.6 million were up $1.4 million in the second quarter of fiscal 2006 from the
comparable 2005 quarter. This increase was driven by an increase in material
margin of 2.1 cents per pound sold less higher conversion costs of 1 cent per
pound sold. The material margin benefited from a neutral to downward resin price
market, the concerted effort to expand margins to address increased freight and
utilities costs and improved profitability from our sheet operation in Mexico.
The higher conversion costs reflect increases in freight and utilities costs,
offset by lower labor-related costs resulting from our 2005 restructuring
activities.
FIRST SIX
SECOND QUARTER MONTHS
--------------- ---------------
(IN MILLIONS) 2006 2005 2006 2005
------ ------ ------ ------
Net Sales $240.9 $238.1 $459.2 $427.8
====== ====== ====== ======
Operating Earnings, excluding
Stock Option Expenses &
Special Items $ 20.6 $ 19.3 $ 33.6 $ 26.9
====== ====== ====== ======
Operating Earnings $ 20.5 $ 9.8 $ 33.2 $ 17.5
====== ====== ====== ======
COLOR & SPECIALTY COMPOUNDS--Our Color & Specialty Compounds segment's net sales
increased to $122.3 million or 8% over last year's $113.4 million. This sales
change was comprised of a 7% increase from price/mix and 1% increase from
volume. The 1% volume increase reflects growth in Building & Construction and
Transportation markets, partially offset by the elimination of a tolling project
(material provided by the customer that is only converted by Spartech) for a
customer in the electronics market (1% negative impact). Disruptions associated
with our Donora consolidation efforts were less for the quarter as the project
moves forward.
The following table provides underlying sales trends for this segment's two
major product categories: Tolling & Resale and Proprietary Products (engineered
compounds and color concentrates).
FIRST SIX
SECOND QUARTER MONTHS
-------------- -------------
(IN MILLIONS OF POUNDS) 2006 2005 2006 2005
----- ----- ----- -----
Proprietary Products 133.9 132.5 1% 249.4 252.9 (1%)
Tolling and Resale 43.7 42.8 2% 82.2 91.7 (10%)
----- ----- --- ----- ----- ---
Total Pounds Sold 177.6 175.3 1% 331.6 344.6 (4%)
===== ===== === ===== ===== ===
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SPARTECH CORPORATION
SECOND QUARTER 2006 EARNINGS
ADD 3
This segment's operating earnings in the second quarter of fiscal 2006 were $8.1
million compared to $2.8 million in the second quarter of fiscal 2005. The
segment's operating earnings included $.6 million of restructuring and exit
costs and $.1 million for the expensing of stock options in the second quarter
of 2006 and $4.4 million of restructuring and exit costs in the second quarter
of 2005. Excluding stock option expenses and special items, operating earnings
of $8.7 million were up $1.4 million in the second quarter of fiscal 2006 from
the comparable 2005 quarter. This increase was driven by an increase in material
margin of 2.2 cents per pound sold less higher conversion costs of 1.7 cent per
pound. The material margin benefited from our focused efforts to manage margins
for changes in resin and certain conversion costs.
FIRST SIX
SECOND QUARTER MONTHS
--------------- ---------------
(IN MILLIONS) 2006 2005 2006 2005
------ ------ ------ ------
Net Sales $122.3 $113.4 $228.7 $210.5
====== ====== ====== ======
Operating Earnings, excluding
Stock Option Expenses &
Special Items $ 8.7 $ 7.2 $ 13.8 $ 12.9
====== ====== ====== ======
Operating Earnings $ 8.1 $ 2.8 $ 12.5 $ 8.5
====== ====== ====== ======
ENGINEERED PRODUCTS - Net Sales in our Engineered Products segment in the second
quarter of 2006 were flat with last year's second quarter. Sales decreases for
the divestiture of assets related to our West Coast profiles operations in the
fourth quarter of 2005 were mostly offset by strong sales to the Lawn & Garden
market for our Wheels business.
This segment's operating earnings for the second quarter of fiscal 2006 were
$3.4 million compared to an operating loss of $1.7 million in the second quarter
of fiscal 2005. The segment's operating earnings included $3.5 million of
restructuring and exit costs in the second quarter of 2005. Excluding stock
option expenses and special items, operating earnings of $3.4 million were up
$1.6 million in the second quarter of fiscal 2006 from the comparable 2005
quarter. This $1.6 million increase was related to significant improvement in
the profitability of our Wheels operation which experienced start up costs and
disruptions in 2005 related to the move of an operation from California to
Mexico and the ramp up in production for a significant new customer. In
addition, the second quarter of 2005 included losses from its West Coast
profiles operation of $0.3 million.
FIRST SIX
SECOND QUARTER MONTHS
-------------- --------------
(IN MILLIONS) 2006 2005 2006 2005
----- ----- ----- -----
Net Sales $26.1 $26.1 $45.0 $43.9
===== ===== ===== =====
Operating Earnings, excluding
Stock Option Expenses &
Special Items $ 3.4 $ 1.8 $ 4.4 $ 2.4
===== ===== ===== =====
Operating Earnings $ 3.4 $(1.7) $ 4.4 $(1.1)
===== ===== ===== =====
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SPARTECH CORPORATION
SECOND QUARTER 2006 EARNINGS
ADD 4
CASH FLOW PERFORMANCE
Cash provided by operating activities was $26.1 million in the second quarter of
2006 and $40.9 million for the first six months of 2006 compared to $22.0
million in the second quarter of 2005 and $13.4 million for the first six months
of 2005. This improvement in operating cash flow primarily reflects stronger
earnings and working capital improvements, specifically an average decrease of
two days of sales outstanding and an inventory turn increase from 8.5 times to
10.7 times as of April 2006. This cash flow from operations has provided the
opportunity to pay down debt by $28.9 million in the first half of 2006 compared
to borrowing $24.6 million for the same period of 2005, after excluding debt
repayments from the $35.0 million reduction in cash in the first half of 2005.
As a result, our debt to equity ratio of .82 to 1 is the lowest level in the
last ten years.
SPECIAL ITEMS AND STOCK OPTION EXPENSES
The special items recognized in the second quarter of 2006 related primarily to
restructuring and exits costs for the consolidation of our Donora, Pennsylvania
and Arlington, Texas facilities and totaled $.5 million pre-tax ($.3 million
after tax). In addition, we recognized expenses of $.6 million pre-tax ($.5
million after tax) related to the expensing of stock options in the second
quarter of 2006. In the second quarter of 2005, we recognized $10.4 million in
fixed asset charges ($6.5 million after tax) and $7.6 million in restructuring &
exit costs ($4.8 million after tax).
Collectively these special items and stock option expenses totaled $1.1 million
in the second quarter of 2006 compared to $18.0 million in the second quarter of
2005. Excluding special items and stock option expenses, operating earnings were
$29.2 million in the second quarter of fiscal 2006, up $4.9 million from the
comparable 2005 quarter.
SUBSEQUENT CAPITAL RESTRUCTURING
In June 2006, we initiated a series of capital structure transactions to take
advantage of the current debt position resulting from our favorable operating
cash flows that paid down over $110 million of debt in the last four quarters.
These transactions consisted of the following:
- Amended our Bank Credit Facility to increase it from $200 million to
$300 million and extended it for a new five year term;
- Closed on $50 million of a new Private Placement of 5.78% unsecured
notes with a five year term;
- Redeemed $50 million of our 6.5% convertible preferred securities; and
- Notified the holders of the $100 million in 7.0% convertible preferred
securities of their redemption later in our third quarter of 2006.
These transactions will result in a combined charge of $5.5 million (including
the non-cash write-off of unamortized debt issue costs of $1.8 million) in the
third quarter of 2006. These transactions will eliminate the potential dilutive
effect of a future conversion of the convertible debentures. Using our current
interest rates, we estimate an annual interest savings of $1.7 million ($1.1
million after tax) from these transactions. Overall, the result of these
transactions provides a more efficient capital structure to finance our future
growth.
EARNINGS GUIDANCE
As a result of significant progress to date in our business improvement and
balance sheet management efforts, the Company is increasing its earnings
guidance for fiscal 2006 by $0.05 per share to a range of $1.28 to $1.38
excluding the effect of FAS 123(R) and special items. This results in guidance
of $1.22 to $1.32 per share including the impact of stock option expensing of
approximately $0.06 per share for the full year, but before the impact of
special items related to restructuring and debt refinancing activities. A
summary of our guidance follows:
3RD QUARTER 2ND HALF FULL YEAR
------------- ------------- -------------
Earnings Per Share Before the
Impact of Special Items &
Stock Option Expenses $0.32 - $0.37 $0.63 - $0.73 $1.28 - $1.38
============= ============= =============
Earnings Per Share Before the
Impact of Special Items, but
Including Stock Option Expenses $0.30 - $0.35 $0.59 - $0.69 $1.22 - $1.32
============= ============= =============
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SPARTECH CORPORATION
SECOND QUARTER 2006 EARNINGS
ADD 5
NON-GAAP MEASURES
We believe that operating earnings, net earnings, and earnings per share
excluding special items and stock option expenses, which are non-GAAP
measurements, are meaningful to investors because they provide a view of the
Company's comparable operating results. Special items (including fixed asset
charges and restructuring & exit costs) represent significant charges that we
believe are important to an understanding of the Company's overall operating
results in the periods presented. Stock option expenses are included as a
non-GAAP reconciling item since our analysts' and public estimates have not yet
considered the effect of these expenses and would not be comparable to our
reported results. Such non-GAAP measurements are not in accordance with
generally accepted accounting principles (GAAP) and should not be viewed as an
alternative to GAAP measures of performance. A reconciliation of GAAP
measurements to non-GAAP can be found at the end of this Release.
*******
Spartech Corporation is a leading producer of engineered thermoplastic sheet
materials, polymeric compounds and concentrates, and engineered product
solutions. The Company has facilities located throughout the United States,
Canada, Mexico, and Europe with sales of approximately $1.4 billion, annually.
SAFE HARBOR FOR FORWARD-LOOKING STATEMENTS
This press release contains "forward-looking statements" within the meaning of
the Private Securities Litigation Reform Act of 1995. "Forward-looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995 relate to future events and expectations, include statements containing
such words as "anticipates," "believes," "estimates," "expects," "would,"
"should," "will," "will likely result," "forecast," "outlook," "projects," and
similar expressions. Forward-looking statements are based on management's
current expectations and include known and unknown risks, uncertainties and
other factors, many of which management is unable to predict or control, that
may cause actual results, performance or achievements to differ materially from
those expressed or implied in the forward-looking statements. Important factors
which have impacted and could impact our operations and results include: (a)
adverse changes in economic or industry conditions generally, including global
supply and demand conditions and prices for products of the types we produce;
(b) material adverse changes in the markets we serve, including the
transportation, packaging, building and construction, recreation and leisure,
and other markets, some of which tend to be cyclical; (c) our inability to
achieve the level of cost savings, productivity improvements, synergies, growth
or other benefits anticipated from acquired businesses and their integration;
(d) volatility of prices and availability of supply of energy and of the raw
materials that are critical to the manufacture of our products, particularly
plastic resins derived from oil and natural gas, including future effects of
natural disasters; (e) our inability to manage or pass through an adequate level
of increases to customers in the costs of materials, freight, utilities, or
other conversion costs; (f) our inability to predict accurately the costs to be
incurred or savings to be achieved in connection with announced production plant
restructurings; (g) adverse findings in significant legal or environmental
proceedings or our inability to comply with applicable environmental laws and
regulations; (h) adverse developments with work stoppages or labor disruptions,
particularly in the automotive industry; (i) our inability to achieve
operational efficiency goals or cost reduction initiatives; (j) our inability to
develop and launch new products successfully; (k) restrictions imposed on us by
instruments governing our indebtedness, and the possible inability to comply
with requirements of those instruments; and (l) weaknesses in internal controls.
We assume no duty to update our forward-looking statements.
-TABLE TO FOLLOW-
SPARTECH CORPORATION
SECOND QUARTER 2006 EARNINGS
ADD 6
SPARTECH CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(Unaudited and dollars in thousands, except per share data)
QUARTER ENDED SIX MONTHS ENDED
--------------------- ---------------------
APRIL 29, APRIL 30, APRIL 29, APRIL 30,
2006 2005 2006 2005
--------- --------- --------- ---------
NET SALES ............................... $389,278 $377,658 $732,869 $682,170
COST AND EXPENSES
Cost of sales ........................ 341,127 333,046 650,480 609,142
Selling, general and administrative .. 18,403 18,941 36,134 35,816
Amortization of intangibles .......... 1,205 1,414 2,375 2,672
Fixed asset charge ................... -- 10,386 -- 10,386
Restructuring and exit costs ......... 496 7,619 962 7,619
-------- -------- -------- --------
361,231 371,406 689,951 665,635
-------- -------- -------- --------
OPERATING EARNINGS ...................... 28,047 6,252 42,918 16,535
Interest (net of interest income of
$214, $359, $281 and $450,
respectively) ..................... 5,591 6,378 11,343 12,852
-------- -------- -------- --------
EARNINGS BEFORE INCOME TAXES ............ 22,456 (126) 31,575 3,683
Income taxes ......................... 8,547 (46) 12,010 945
-------- -------- -------- --------
NET EARNINGS ............................ $ 13,909 $ (80) $ 19,565 $ 2,738
======== ======== ======== ========
NET EARNINGS PER COMMON SHARE
Basic ................................ $ .43 $ (--) $ .61 $ .09
======== ======== ======== ========
Diluted .............................. $ .42 $ (--) $ .61 $ .08
======== ======== ======== ========
DIVIDENDS DECLARED PER COMMON SHARE ..... $ .125 $ .120 $ .250 $ .240
======== ======== ======== ========
-MORE-
SPARTECH CORPORATION
SECOND QUARTER 2006 EARNINGS
ADD 7
SPARTECH CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(Dollars in thousands)
APRIL 29,
2006 OCTOBER 29,
(UNAUDITED) 2005
----------- -----------
ASSETS
CURRENT ASSETS
Cash and equivalents...................................... $ 2,613 $ 4,601
Receivables, net.......................................... 213,572 213,996
Inventories............................................... 127,770 119,401
Prepaids and other........................................ 19,760 16,970
---------- ----------
TOTAL CURRENT ASSETS................................... 363,715 354,968
PROPERTY, PLANT AND EQUIPMENT, NET........................... 306,597 307,386
GOODWILL..................................................... 352,405 352,405
OTHER INTANGIBLE ASSETS...................................... 38,865 40,710
OTHER ASSETS................................................. 11,886 18,926
---------- ----------
TOTAL ASSETS........................................... $1,073,468 $1,074,395
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Current maturities of long-term debt...................... $ 6,893 $ 11,175
Accounts payable.......................................... 130,607 121,682
Accrued liabilities....................................... 57,313 57,226
---------- ----------
TOTAL CURRENT LIABILITIES.............................. 194,813 190,083
Convertible subordinated debentures.......................... 154,639 154,639
Other long-term debt, less current maturities................ 190,554 214,141
---------- ----------
TOTAL LONG-TERM DEBT................................... 345,193 368,780
Deferred taxes............................................... 94,289 91,605
Other long-term liabilities.................................. 10,368 10,881
---------- ----------
TOTAL LONG-TERM LIABILITIES............................ 449,850 471,266
---------- ----------
SHAREHOLDERS' EQUITY
Common stock, 33,131,846 shares issued in 2006 and 2005... 24,849 24,849
Contributed capital....................................... 197,774 196,811
Retained earnings......................................... 228,478 216,928
Treasury stock, at cost, 1,055,553 shares in 2006 and
1,143,701 shares in 2005............................... (23,889) (26,019)
Accumulated other comprehensive income.................... 1,593 477
---------- ----------
TOTAL SHAREHOLDERS' EQUITY............................. 428,805 413,046
---------- ----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY............. $1,073,468 $1,074,395
========== ==========
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SPARTECH CORPORATION
SECOND QUARTER 2006 EARNINGS
ADD 8
SPARTECH CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited and dollars in thousands)
SIX MONTHS ENDED
---------------------
APRIL 29, APRIL 30,
2006 2005
--------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES
Net earnings............................................ $ 19,565 $ 2,738
Adjustments to reconcile net earnings to net cash
provided by (used for) operating activities:
Fixed asset charge................................ -- 10,386
Restructuring and exit costs...................... -- 7,163
Depreciation and amortization..................... 20,168 20,739
Stock compensation expense........................ 1,555 210
Change in current assets and liabilities.......... (3,208) (24,118)
Other, net........................................ 2,846 (3,713)
-------- --------
Net cash provided by operating activities............ 40,926 13,405
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures.................................... (9,388) (23,233)
Business acquisitions................................... -- (1,224)
Dispositions of assets.................................. 2,371 --
-------- --------
Net cash used for investing activities............... (7,017) (24,457)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
Net payments on notes and revolving credit facilities... (28,480) (9,830)
Payments on bonds and leases............................ (373) (579)
Cash dividends on common stock.......................... (7,863) (7,713)
Stock options exercised................................. 2,134 970
Treasury stock acquired................................. (1,541) (6,846)
Excess tax benefits from stock based compensation....... 224 --
-------- --------
Net cash used for financing activities............... (35,899) (23,998)
-------- --------
Effect of exchange rate changes on cash and equivalents.... 2 69
Decrease in cash and equivalents........................... (1,988) (34,981)
Cash and equivalents at beginning of year.................. 4,601 41,272
-------- --------
CASH AND EQUIVALENTS AT END OF QUARTER..................... $ 2,613 $ 6,291
======== ========
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SPARTECH CORPORATION
SECOND QUARTER 2006 EARNINGS
ADD 9
SPARTECH CORPORATION
(IN THOUSANDS, UNAUDITED)
We believe that operating earnings, net earnings, and earnings per share
excluding special items and stock option expenses, which are non-GAAP
measurements, are meaningful to investors because they provide a view of the
Company's comparable operating results. Special items (fixed asset charges and
restructuring and exit costs) represent significant charges that we believe are
important to an understanding of the Company's overall operating results in the
periods presented. Stock option expenses are included as a non-GAAP reconciling
item since our analysts and public estimates have not yet considered the effect
of these expenses and would not be comparable to our reported results. Such
non-GAAP measurements are not recognized in accordance with generally accepted
accounting principles (GAAP) and should not be viewed as an alternative to GAAP
measures of performance. The following reconciles GAAP to non-GAAP measures for
operating earnings, net income, and earnings per share excluding special items
used within this release. Amounts are unaudited and in thousands, except per
share data.
THREE MONTHS ENDED SIX MONTHS ENDED
--------------------- ---------------------
APRIL 29, April 30, APRIL 29, April 30,
2006 2005 2006 2005
--------- --------- --------- ---------
Operating Earnings (GAAP) $28,047 $ 6,252 $42,918 $16,535
Fixed Asset Charge -- 10,386 -- 10,386
Restructuring & Exit Costs 496 7,619 962 7,619
Stock Option Expenses 616 -- 1,280 --
------- ------- ------- -------
Operating Earnings Excluding Special
Items & Stock Option Expenses
(Non-GAAP) $29,159 $24,257 $45,160 $34,540
======= ======= ======= =======
Net Earnings (Loss) (GAAP) $13,909 $ (80) $19,565 $ 2,738
Fixed Asset Charge -- 6,543 -- 6,543
Restructuring & Exit Costs 307 4,800 596 4,800
Stock Option Expenses 481 -- 1,002 --
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Net Earnings Excluding Special Items &
Stock Option Expenses (Non-GAAP) $14,697 $11,263 $21,163 $14,081
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Earnings (Loss) Per Diluted Share $ .42 $ (--) $ .61 $ .08
Fixed Asset Charge, net of tax -- .20 -- .20
Restructuring & Exit Costs, .01 .15 .02 .15
net of tax
Stock Option Expenses .01 -- .02 --
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Earnings (Loss) Per Diluted Share
Excluding Effect of Special Items &
Stock Option Expenses (Non-GAAP) $ .44 $ .35 $ .65 $ .43
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